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3/24/22
STOCKS –NVDA
MACRO – SPY
PRICES WILL BE RISING TO $65/MONTH OR $520 ON MARCH 31; START YOUR FREE TRIAL NOW TO LOCK IN THE LOWER RATES. CURRENT MEMBERS UNAFFECTED!!!
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Today, the S&P 500 rose by around 1.4%, and what seems to have become churning at the top, and should lead to a reversal of a trend. The pattern to this point is looking a lot like that of the end of January. From the big rally off the lows to this churning pattern that is now taking place.
Again, to repeat the upside is very clear and easy to predict, because we all know the next level of resistance comes at 4,580. The problem is all of the patterns suggest that doesn’t happen.
What is sort of strange is that despite the S&P 500 closing slightly higher than it did on Tuesday, the RSI fell by just a touch to 59.28 versus 59.96 on Tuesday. Also, volume levels appear to have eroded as well, which is particularly important, especially in a thin market like this one.
There is also a clear downtrend in the RSI, as well as the 600-hour moving average is acting as resistance. As dumb as the 600-hour moving average with Bollinger bands may sound it has actually been pretty at good a defining trading range.
So if the patterns continue to hold, then they would suggest that a drop is coming. The index continues to also follow the typical options expiration pattern as I noted over the weekend, with the first two days of the week following through and then some consolidation. Additionally, the reserve balances on the Fed balance sheet fell sharply this week, as I expected it would. Reserve balances have acted as a pretty solid leading indicator to stock prices since QE started to get paired back. The balance sheet started to fall last week.
Nvidia (NVDA)
So did Nvidia find greener pastures, or is it merely in the process of being put out to pasture, that’s the question. The stock rallied on a very apparent gamma squeeze, which was noted by a lot of call activity expiring tomorrow at the $270 and $280 strike prices. It is very easy to see the big drop in the SKEW and the tremendous rise in the call volumes.
Besides, it looks like Nvidia is merely playing a game of catch-up to its analog with Cisco from the year 2000.
-Mike
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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